In short
Taiwan’s proposed 2027 defense budget and readiness amid rising China pressure; Evergrande founder Xu Jiayin’s life sentence for financial fraud; China’s humanoid-robot boom and who buys robots/training data.
Guests
Alice Han and James King (podcast hosts/commentators; James has lived through Evergrande’s rise and collapse and discusses Taiwan/China defense comparisons).
Key claims
- Taiwan approved a 2027 defense budget of 1.12T Taiwan dollars (~$35B), up 18.2%, but it still needs passage in Taiwan’s opposition-controlled legislature; exercises suggest preparation for blockade/urban warfare.
- Taiwan’s military posture is driven partly by perceived U.S. unreliability/strategic ambiguity and the pause of a proposed $14B arms package.
- Evergrande’s collapse is a symbol of property crackdown effects and fraud/corruption; Xu Jiayin received life imprisonment.
- Humanoid robots are largely bought by government-backed teleoperation training centers that sell training data to robot makers; “chatGPT moment” for embodied AI may arrive 2028–(optimistically 2–3 years; pessimistically 5–10).
Notable examples
- Taiwan drills: ~10 days, 20k–22k troops, decentralized command, urban defense, comms blackout, blockade simulations.
- Evergrande: Hongda Real Estate inflated 2019 revenue by 214B RMB and 2020 by 350B RMB; PwC fined $62M (China) and $166M (Hong Kong).
Written by AI. May contain mistakes. Listen to the episode to check what was said.
Chapters
Tap a time to open that second in VOMarket Overview in China
0:43 to 1:19
Check the current state of the Chinese markets.
“Your financial advisor may be perfectly happy keeping you in public index funds and spending the afternoon golfing, hoping you don't call.”
Market Overview in China
2:55 to 3:34
Check the current state of the Chinese markets.
“That's all coming up, but first, let's do a quick check-in with how the Chinese markets are starting the week.”
Taiwan's Defense Budget Discussion
3:34 to 6:10
Analyze Taiwan's proposed defense budget and its implications.
“Biggest gainers included Sinopec, up over 4%, China Coal up around 3.5%, and Ping An Insurance up 3%.”
Taiwan's Military Exercises
6:10 to 7:56
Dive into the details of Taiwan's serious military exercises.
“Yeah, Alice, I mean, my sense of this, the importance of this 18 % rise in proposed defense spending for next year, to me, what it means is that Taiwan's threat perception towards the mainland, towards China, is rising.”
Geopolitical Implications of Taiwan's Defense
7:56 to 14:00
Explore the geopolitical dynamics affecting Taiwan's defense strategies.
“So the military exercises were really quite interesting.”
Taiwan's Defense Strategy Amidst Uncertainty
14:00 to 17:04
Learn about Taiwan's evolving defense strategy and the implications of U.S. reliability.
“Russia and China and nuclear powers, Ukraine and Taiwan are not.”
Taiwan's Defense Strategy Amidst Uncertainty
17:09 to 17:56
Learn about Taiwan's evolving defense strategy and the implications of U.S. reliability.
“Because any AI model is only as good as the data it's built on.”
The Fall of Evergrande: Lessons Learned
20:03 to 27:58
Explore the dramatic collapse of Evergrande and its implications for China's economy.
“A court has just closed the book on one of the most dramatic corporate collapses in modern Chinese history.”
Impact of China's Property Market Collapse
28:00 to 32:29
Learn about the implications of the collapse of the Chinese property market and its effects on the economy.
“government, Beijing, that is, doesn't really want to see the property sector reflate into the bubble that it was pre-2021, right?”
Impact of China's Property Market Collapse
32:34 to 33:59
Learn about the implications of the collapse of the Chinese property market and its effects on the economy.
“and use code Prof G for a free welcome kit, five free travel sachets plus 10 % off your order.”
Show all 15 chapters
China's Humanoid Robot Industry
35:18 to 42:00
Explore the growth and challenges of China's humanoid robot market and its future.
“China's humanoid robot industry has become the biggest flex China has when it comes to its high-tech manufacturing sector.”
Advancements in Embodied AI and Robotics in China
42:00 to 47:43
Explore the evolution of AI in robotics, focusing on China's approach and market dynamics.
“So I love the fact, James, that you talked about the chat GPT moment for the humanoid robotic space.”
The Future of Chinese Exports and Trade Relations
47:43 to 51:20
Discuss predictions for Chinese exports and the implications of international trade relations.
“What is the feeling in Europe now towards the humanoid robot masses coming from China?”
The Future of Chinese Exports and Trade Relations
51:49 to 52:49
Discuss predictions for Chinese exports and the implications of international trade relations.
“in the country built specifically for businesses like yours.”
The Future of Chinese Exports and Trade Relations
53:17 to 53:49
Discuss predictions for Chinese exports and the implications of international trade relations.
“The Devil Wears Prada 2 is now streaming on Disney Plus and Hulu.”
Transcript
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2:17James Kynge:What I found so fascinating digging deep into the data is the fact that actually a lot of the robots are not being bought by families or consumers. They're actually being bought by these government-backed training centers that do what is called teleoperation training data. So humans are remotely guiding these robots through physical tasks, and then they sell whatever data they generate from those tasks back to the robot makers to improve their AI.
2:53James Kynge:Welcome to China Decode. I'm Alice Han.
2:55Alice Han:And I'm James King.
2:57James Kynge:In today's episode of China Decode, we're discussing the largest defense budget in Taiwan's history, the man who built China's biggest property empire, who was sentenced to life in prison, and getting to the bottom of who is really buying and using China's humanoid robots. That's all coming up, but first, let's do a quick check-in with how the Chinese markets are starting the week. On Monday, markets were down thanks to a broad tech sector sell-off, with news from Alibaba leading the sell-off. The Shanghai Composite was down 0.59%, the Shenzhen Component fell 2.13%, and the Hang Seng was down 1.89%.
3:34James Kynge:Biggest gainers included Sinopec, up over 4%, China Coal up around 3.5%, and Ping An Insurance up 3%. All right, let's get into it. We'll start in Taipei, where the government of Taiwan has approved a proposed 2027 budget this week that would push defense spending past 1.12 trillion Taiwanese dollars, or roughly 35 billion US dollars. That's an 18.2 % jump from this year, but the budget still has to make it through Taiwan's opposition-controlled legislature. Well, James, before we get into the politics minutiae of whether or not this gets passed, this is pretty considerable given that, if you recall, earlier this year, there was some speculation that Trump's$14 billion arms sales package would go through.
4:23James Kynge:It seems like he's paused that. It's unclear whether or not he's going to revive that package in a time in which a lot of missiles and ammunitions are being used up in the Middle East. So the big question is, will this spending actually be significant for Taiwan's battle preparedness? I'm a little skeptical. When I compare Taiwan to Ukraine, for instance, what strikes me is the relative backwardness of the Taiwanese military and the lack of preparedness. There's 170 ,000 active troops in Taiwan, now 300 ,000 active troops in Ukraine. Taiwan currently spends about 2.1 % of GDP on the military. Ukraine seriously ramped up in 2021 spending as a share of GDP, and that's gone up to 40%, which is considerable to say the least.
5:12James Kynge:But beyond that, it seems like everyday Taiwanese people don't have the same sense of battle preparedness and bellicosity when it comes to mainland China as the Ukrainians do towards Russia. Maybe I'm misreading this, but when I go to Taiwan, and even mainland China, I don't sense this degree of urgency that one would have sensed in the years leading up to the Russia-Ukraine crisis. Maybe I'm misreading this. We can get into the specifics of some of the military equipment and hardware, which I think is considerable. But my big takeaway is that I just think that Taiwan will not be in the same place if war strikes that Ukraine has been.
5:54James Kynge:And Ukraine is really surprised to the upside, the fact that it has been able to weaponize asymmetric capabilities. It has really been able to dig deep into its population for both active duty and reserves. I think Taiwan might be a different story.
6:10Alice Han:Yeah, Alice, I mean, my sense of this, the importance of this 18 % rise in proposed defense spending for next year, to me, what it means is that Taiwan's threat perception towards the mainland, towards China, is rising. And I think we can also see that in the recent military exercises that Taiwan conducted. The reason why, of course, and I'm sure all of our listeners are well aware of this, the reason why this is such a hot topic is because we have a three-way dynamic here. You have mainland China on one side, and then on the other side, you have Taiwan and the United States. And of course, in 1979, the United States signed the Taiwan Relations Act.
7:00Alice Han:Now, this does not legally commit the U.S. to use military force to defend Taiwan. But what it does do is it requires the U.S. to provide Taiwan with the tools and arms needed for self-defense and to maintain US military capacity to resist threats against Taiwan's security. So it's a somewhat vague form of words. But if you ask me what it means is that it doesn't mean that Uncle Sam will be fighting alongside Taiwanese soldiers against China necessarily. Of course, the US could choose to do that, but it isn't required to do that by this act. But what it does mean is that the US is very much involved in the arms that Taiwan needs to defend itself against a potential threat from China.
7:56Alice Han:And so that's the key background. And that's why I think both this new budget that Taiwan is proposing and the military exercise that took place earlier on this month are key because, to me, they both mean that the threat perception from Taiwan to China is rising. So the military exercises were really quite interesting. They were super realistic this year. In the past, quite a few of these Taiwanese exercises have been somewhat ceremonial. But this year, the exercises went on double the length of time from last year. They lasted for about 10 days. There were about 20 ,000 to 22 ,000 Taiwanese troops taking part.
8:45Alice Han:And the nature of the exercises were supposed to mirror or to echo the chaos of war. The exercise was being undertaken by Taiwanese troops with a decentralized command, and they were simulating urban warfare, bridge and intersection defense, as well as a communication blackout drill in major cities such as Taipei. And the other thing that was being simulated was how Taiwan would respond to a blockade of the island by China. So you can see, I think, through the details of what took place in this military exercise, that Taiwan is getting very serious about preparing for an invasion. Now, I want to be absolutely clear.
9:34Alice Han:This does not mean that there will be an invasion, nor does it mean that I am predicting an invasion. I'm absolutely not predicting an invasion, but it shows that Taiwan is getting, I would say, much more serious. And to my mind, that's where this budget, the increase of 18%, taking this budget to above$1 trillion Taiwanese, that's$31 billion US for the first time. And I think it just shows that Taiwan's getting more serious. Now, If you ask me, this is a natural response to the increased bellicosity or pressure that Taiwan is experiencing from China. The People's Liberation Army, that's China's huge army, routinely sends war planes across the median line of the Taiwan Strait.
10:34Alice Han:The Taiwan Strait is the rather large waterway, actually, that flows between Taiwan and the mainland. And also, it's sending naval vessels close to Taiwanese waters. So mainland China has also conducted many large-scale military exercises near Taiwan. So the temperature on both sides of the strait, I would say, is rising. I think you made the excellent point, Alice, that this doesn't add up to any clear and present danger as far as we know right now. Is that the way you see it?
11:07James Kynge:Well, firstly, I agree with you, James, that right now the Taiwanese are getting more ready to, let's say, put it this way, have a degree of self-sufficiency in military terms. and the reason I say that is because I think that the say the policy on conscription has been a pretty strong signal that they are more worried of the threat of a showdown over Taiwan with the mainland so before 2008 there was a two year mandatory military service, this is true of a lot of neighboring countries whether it's you know, there's a strong tradition of military service in a lot of neighboring countries in the region, if you look at South Korea and also Singapore.
11:54James Kynge:But then in 2013, they phased that out and replaced it with a four-month conscription that was largely for voluntary work. And then just two years ago, so 2024, they brought back one-year military service as part of the conscription program, again, suggesting that the government, The Taiwanese government is getting more worried about the domestic combat readiness of the Taiwanese population. But here I may differ from your assessment, James, so correct me if I'm wrong. I don't think it's so much the threat that they're perceiving from China as it is the threat of America withdrawing. Because you rightly do point out the fact that embedded in the Taiwan Relations Act going back to 1979 is this degree of strategic ambiguity that the U.S., I think, deliberately put in terms of the language, such that it is not clear what American involvement or deterrence would look like if China did a blockade, a quarantine, or a full-scale invasion.
13:00James Kynge:And so within that gray zone, so to speak, the U.S. has been, I think, largely happy to support Taiwan through arms sales. Like I said And just now, we haven't seen the$14 billion, which would have been a record package, go through this year. I doubt it will go through, and certainly not before Xi meets with Trump in the U.S. September 24. So then that builds the case for the Taiwanese to say, hey, if Trump and the U.S. and writ large are not going to back us and they're not going to supply us with arms, then we've got to look to our own population and to our own industrial complex for combat readiness and capabilities.
13:40James Kynge:And again, and this leads me to my next question. I'm curious if you have a thought on this. You know, have there been lessons from Ukraine for Taiwan? Because I think there are some parallels, you know, in terms of Russia and China being significantly larger than Ukraine and Taiwan, respectively. Russia and China and nuclear powers, Ukraine and Taiwan are not. And similarly, Ukraine and I think Taiwan will have to fight to some extent asymmetric warfare given the capabilities disparity. And here, just in recent years, it looks like the Taiwanese have shifted away from some of the traditional military equipment that they're getting from the U.S.
14:22James Kynge:to developing their own indigenous anti-ship missiles, UAV drones. Again, I think that's been a big lesson from Ukraine that actually drones can have a real asymmetric impact on the battlefield and also laying down sea mines as well to disrupt PLA, submarines and carrier vessels. I want to get your sense of that trend because based on conversations over the years, really, I think the direction of travel from people that I've spoken to in Taiwan is that, hey, the Americans are not reliable allies. We need to look to ourselves.
14:59Alice Han:Yeah, I must say I have also heard that. I've been to Taiwan a couple of times over the last couple of years and I used to be based there and I've met Taiwanese people coming over here as well. And that sense is definitely on the rise, I would say. The level of U.S. commitment towards stepping in with military force in the event of a conflict between China and Taiwan, I would say the level of Taiwanese confidence that that would happen is declining, dwindling, perhaps even dwindling sharply. But the truth is that we just don't know. You know, this is a decision that will be taken by the U.S. president and the people around him at the time of whatever conflagration occurs.
15:48Alice Han:And there are so many scenarios for what type of conflagration might occur between China and Taiwan. There's the full-on invasion scenario. But increasingly these days, what we hear is gray zone tactics, a kind of a blockade or a partial blockade or a drone swarm over Taiwan or knocking out critical Taiwanese infrastructure and issuing ultimatums. There are so many permutations as to how China could decide to pressure Taiwan that it's very hard to give a clear answer on how the U.S. might back Taiwan in that instance. So, you know, it is just a very subtle and complicated and also evolving picture, I would say.
16:37James Kynge:OK, we'll be back with more after a quick break. Stay with us.
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20:02James Kynge:Welcome back. A court has just closed the book on one of the most dramatic corporate collapses in modern Chinese history. The founder of China Evergrande, Xu Jiayin, was once China's richest man and has been sentenced to life in prison for large-scale financial fraud. James, I remember many years ago that, you know, Xu Jiayin would be on TV, be on the cover of magazines. This was, for a period of time, you might have been the richest man in the world, but certainly the richest man in China. And his story was really the story of the rise of real estate developers, private real estate developers in China in the early 2000s going into around 2021.
20:47James Kynge:And here we see a real breaking point in the industry and in the fate of Evergrande. As I recall, just before the real estate crackdown, Evergrande in its heydays was not just a real estate developer. It was also issuing wealth management products. It was in the financial sector. There was talks about it creating its own electric vehicle, its own automobile. bill. So it really was expanding into a conglomerate across sectors and was a huge part of China's vibrant private sector. But there was a lot of financial scandal associated with this company. At some point, there were people who were trying to get their money back from these wealth management products that were effectively a form of financial fraud.
21:37James Kynge:So it isn't surprising that that this guy, Xu Jain, has basically been issued this sentence of life imprisonment. And it's a signal that not only is the central government unhappy with a lot of the financial fraud, but also, I think, the political corruption that the private sector has unleashed. You know, in previous discussions, we've talked about the corruption that has happened at the local government level between the private sector and local government officials. This certainly was the case through most of the early 2000s, 2010s. So, you know, this is, I think, the final chapter of what was once one of China's biggest real estate developer stories.
22:20James Kynge:What's your take on this, James? Because you also lived through much of this period too, the heydays.
22:25Alice Han:Yes, I lived through the heady days of Evergrande and also the downfall of Evergrande. I was in Hong Kong at that time. And, you know, my first reflection is, my goodness, how the mighty fall. Shi Jiayin, as you said, was China's richest man at one point. And my other reflection following close on the heels of that is this is a cautionary tale that is relevant today. We've got a lot of money piling into Chinese technology stocks and other types of stocks, both in Hong Kong and in Shanghai and the Shenzhen market as well. And you do have to wonder how many fraud cases are lurking beneath the surface in some of these star Chinese stocks.
23:13Alice Han:And the reason I say that is because Evergrande was an investor darling. You know, it was a huge company. It was, I think, the most valuable real estate company in the world. And so what emerged was a huge accounting scandal. PwC, which is a British accountancy company, acknowledged that its audit work for China Evergrande Group fell unacceptably below expected network standards. And this auditor, PwC, was separately fined 62 million US dollars by Chinese regulators and 166 million US dollars by Hong Kong authorities. That was in April 2026 for its role in signing off on the inflated financials that the Evergrande group had put through.
24:10Alice Han:And when you look at the numbers involved here of those inflated financials, they really are quite stunning because the regulators found that the flagship unit, which is called Hongda Real Estate, inflated its 2019 revenue by 214 billion renminbi and its 2020 revenue by 350 billion renminbi. That's 78 % of the total revenue recorded. So we're talking really big numbers here. I mean, this is a major issue. What I would want to say about how relevant this is today is that, you know, a lot of money is piling in. Are there other frauds lurking beneath the surface that we don't know about? Of course, we don't know about them.
25:05Alice Han:We didn't know about Evergrande at that time. It's hard to overestimate what a darling Evergrande was at that time. The whole world knew about Evergrande. Xu Jiayin himself was a flamboyant character. He had an immunology center at Harvard University, was named after Evergrande. Xu Jiayin had bought a professional football club. He'd expanded into sectors such as EVs, bottled water, entertainment. He donated, as I said, to elite educational establishments around the world. So this guy had everything going for him. He was riding high. And now, as the House of Cards has collapsed, we see what it was built on.
Read the full transcript
25:50Alice Han:So I do think it is relevant for today. I'm not trying to spook people by suggesting that all Chinese stocks are fraudulent, but this is a big, big case of fraud.
26:03James Kynge:Yeah, and it affects the local governments, right? You know, at its height, and this is pre-crackdown and around 2021 on the real estate sector, there's some good economic data that suggests that the real estate sector and real estate-related activities, including construction and services, are about as much as 30 % or were as much as 30 % of the GDP. This is pre-2021 crackdown. So this is a huge part of the economy. It's also a huge part for a lot of local governments. And here, the Evergrande story became, I remember writing a piece about this when Evergrande first defaulted on its bonds back in 2021.
26:43James Kynge:There was a big question about whether or not this was a Lehman crisis moment for China in the sense that, again, here you saw a property-related bubble bursting that could have macro contagion effects and also financial contagion effects. But what has been clear since then is that effectively local governments have been forced to buy up some of the liabilities. They've been forced to make good on some of the projects that Evergrande and other real estate developers left behind. But the sum of liabilities is astonishing. Total liabilities that Evergrande defaulted on was$300 billion. It's still the world's largest corporate litigation for the property sector.
27:27James Kynge:And home prices haven't really recovered since then. Home prices are still, by some metrics, 20 % from their peak. And this was back in around 2020. So the story of Evergrande is not just the story of the fall of Xu Jiayin and other big Chinese private developers. It's the story also of the real estate sector really being taken down by these crackdowns from the central government. And I don't think we're going to get back to the heady days, as you call it, James. of the, you know, the roaring 2000s, 2010s, because it's clear that right now the central government, Beijing, that is, doesn't really want to see the property sector reflate into the bubble that it was pre-2021, right?
28:12Alice Han:Absolutely. I think these days are gone. Now, a lot of the attention in the Chinese stock market and a lot of the investors' attention are in new technologies, such as EVs and batteries and renewables and other things like that. Also, robots and AI and all of these new technologies are attracting a great deal of interest now. It seems like property is yesterday's story. But at the time, the property sector accounted for nearly 30 % of Chinese GDP. And a lot of people, a lot of economists and economic historians have said that the collapse of the Chinese property market is probably the biggest ever property bust in history, exceeding the Japanese property bust of the 1990s and even the US housing sector collapse in the run-up to the 2008 financial crisis.
29:12Alice Han:So we can't really overestimate the size of this thing and the impact that this property collapse has had on the Chinese economy. And Evergrande is the symbol of that collapse. So it really is a very important story. And I believe that it's also a cautionary tale to the Chinese authorities. Perhaps there's something here about an authoritarian system's blind spot. You know, when everything's going well in an authoritarian system and somebody like Xu Jiayin is cock of the hoop, he is extremely powerful, people pay deference to him. He's got more money than Croesus. You know, it's hard to bring somebody like that down.
29:57Alice Han:China is, I would say, itself a deferential culture, and it's certainly deferential to people with plenty of power and money. So maybe there's something there. Perhaps others will disagree with me, but perhaps there's something about the relationship between authoritarianism and
30:17James Kynge:governance as well yeah and to add on to that uh excellent point james the the other issue that we're seeing and it's not just in the real estate sector but also in robotics and evs in any kind of sector where there are hits or or real um shapes of a bubble and that is that the local governments are incentivized to create their own local champions so to speak right there's a the There was a period a couple of years ago when it seemed like almost every major province had its own electric vehicle. Now we've been in through a process of involution where some of these EV companies and solar panel companies and wind turbines before them have gone bankrupt.
31:02James Kynge:So we've had more market consolidation. But in general, part of what makes China very bubbly in sectors like the real estate sector and robotics, which we'll get into, is the fact that you have a lot of local government competition and local governments trying to prop up their own local champions. I think that's not understood as well in other countries because China's system is, yes, authoritarian and centralized, but it actually is quite distributed in terms of output and industrial performance across different provinces that are competing with each other. All right, let's take one last quick break.
31:39James Kynge:Stay with us.
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35:17James Kynge:Welcome back. China's humanoid robot industry has become the biggest flex China has when it comes to its high-tech manufacturing sector. Just this week, a Chinese humanoid robot ran faster than Usain Bolt, breaking his 2009 100-meter dash record, with a caveat that it then ran into a wall and had to be carried out on a stretcher. Chinese vendors reportedly account for something like 97 % of humanoid robots shipped globally in the first half of this year, and Chinese buyers are absorbing roughly 85 % of global demand. I do have to say Usain Bolt is still more charismatic as a runner, but it was amusing to watch these robots run.
35:58James Kynge:You know, we've seen a couple of videos in the last few years of, you know, dancing robots from Unitree, now these robots running marathons, now doing sprints. It points to, I think, the fever pitch in domestic enthusiasm for robots. But what I found so fascinating digging deep into the data is the fact that actually a lot of the robots are not being bought by families or consumers. They're actually being bought by these government-backed training centers that do what is called teleoperation training data. So humans are remotely guiding these robots through physical tasks, and then they sell whatever data they generate from those tasks back to the robot makers to improve their AI.
36:50James Kynge:So in a way, it's this kind of circular model as opposed to direct-to-consumer or going directly into factories to replace workers. Those are happening, but the lion's share, it seems, the demand is as being fed into other sectors of the AI robotics economy. I thought that was super interesting. And that Chinese domestic demand is still the lion's share of the robot demand coming from China. We haven't yet seen an upswing globally, but I think it's only a matter of time, just as we've seen for EVs before it.
37:26Alice Han:Yeah, I mean, I also love these videos. I remember last year that there was that rather sad video of a robot running a race in China, and it fell over and its arm fell off. And then it got up, it staggered back to its feet, and it finished the race. And it had the wires flapping from the arm that it had lost. And it was almost elicited sort of human feelings towards the robot. I felt quite sorry for it, you know, but back to the main point on this is the business model for humanoid robots in any way sustainable or is this just another big bubble? You know what? My sense of this is that it's a little bit like the early days of Amazon.
38:11Alice Han:I can remember when Amazon was not making any money and everybody was saying, oh, you know, I don't know if this Internet will ever catch on. Not sure about selling stuff over the Internet. And now we see, I think, Amazon is capitalized at close to three trillion U.S. dollars. My sense is that there will be a market for humanoid robots, a big, big market. It's just that the technology has not yet caught up with the opportunity. And I would say that what's happening at the moment is, rather interestingly, that the phase of market development is focused on training robots so that the robots themselves can turn themselves into a technology that people actually want to buy.
39:03Alice Han:You know, and I think that a lot of these training centers and the universities and others in China that have bought these robots, what they're really trying to do is to sell the training data that they get from the robots. And it turns out that this training data is actually really quite expensive. something as simple as a five-minute robot dance. I mean, we've all seen the robots do the dance and all of that. But if you want to buy the data that underlies that five-minute robot dance, you might be paying a million renminbi for it. That's 148 ,000 US dollars. So that illustrates how much of a gold rush there is right now for humanoid robot training data.
39:58Alice Han:And the reason there's such a gold rush for that is because everybody in the industry, well, I don't know about everybody, but a lot of the big names in the Chinese industry are transfixed by a point in the future. And that point in the future has been called the chat GPT moment for humanoid robots or for embodied intelligence. And that effectively is when you can just say to a humanoid robot without pre-programming it, you just say, do this or do that. And it will be able to do about 80 % of those tasks. That moment, which is called the chat GPT moment for humanoid robots, is estimated by Wang Xingxing.
40:43Alice Han:He's the CEO of this Unitree Robotics. That's the leading humanoid robot company in China. He reckons that that breakthrough could take two to three years optimistically or not so optimistically up to five to ten years from now. Wang He, who is the founder of the Chinese robotic startup Galbot, said that he reckons the chat GPT moment will arrive by 2028. And, you know, so obviously he's a lot more optimistic than Wang Xing Xing. So to me, this is key because after that moment has arrived, I can see so many use cases for humanoid robots. They can follow commands that are issued off the cuff. They can adapt to their real-time situation without endless pre-programming to do narrow tasks.
41:41Alice Han:So it all depends. When is the chat GPT moment coming? If it's going to come soon, then I would say we're going to see revenues for these robot companies rise sharply. But if it's going to take 10 years, I think a lot of these companies are going to be in the wilderness. They are not going to have strong earnings.
42:02James Kynge:So I love the fact, James, that you talked about the chat GPT moment for the humanoid robotic space. And here, it reminds me of this divergence that we're seeing in the debate on world models. So effectively, the next generation, I think, of AI that goes beyond the LLMs that we are currently experiencing with chat GPT and Claude to the physical AI space where robots and other devices are interacting with the real world and delivering intelligence and knowledge based on the physical world. Right now, there's a debate as to whether or not you go the route of, on the one hand, regenerating and simulating the details of the real world and using that to train the robots on, or if you create an abstraction or prediction model of the world and use the robots to train on that data.
42:58James Kynge:Yan LeConfer, for instance, at AMI Labs, or Fei-Fei Li in her own world models startup. They represent, I think, the very differing approaches between the two. In China, I sense that they favor the idea of re-simulating the world and getting the robots to train within that. Uniontree CEO Wang Xingxing is saying that he really wants China to be a leader in the embodied AI space and has an open source ecosystem for that, for the training of robots that would obviously be open to the public to view. So I do think that this is actually quite important in this bigger debate of where we land in the embodied AI and physical AI, especially if we see China leading in terms of its models.
43:41James Kynge:Right now, a lot of it is still in the early stages of R &D. So for a company like Unitary that just IPO'd a$905 million IPO, it really is the darling of China's robotic sector. So their 2025 revenue was$252 million US dollars and 75 % of that, around 75 % of that was for research and education as opposed to industrials and consumers. Now, that will probably shift over time, but that suggests that we're still in the R &D phase of trying to figure out how do we actually deploy the data, but also the models that have been generated from this embodied AI space. How do you think about how these Chinese companies like Spirit and Unitary are doing globally?
44:28Alice Han:Well, I mean, I think there will be a market if the security agencies in various countries allow there to be a market. I noticed that the US has just cracked down on allowing imports of Chinese humanoid robots into the US. So we'll have to see what Europe does. But overall, I mean, you know, there should be a market all over the world if If the price of these humanoid robots comes down, I know that Unitry does make one humanoid robot for slightly over 5000 US dollars the last time I checked. So that seems like a price that quite a few companies might be willing to pay. And so, you know, I would say this is a this is really a fast evolving space.
45:17Alice Han:But back to the big question of whether or not this is a bubble, if you look at what's happening around the eye-catching companies such as Unitree, you see what appears to be, I mean, it has to be a bubble. There are nearly 370 robotic startups in China, and over 50 of them are planning to list on the stock market, do initial public offerings on various different stock markets. That seems to be quite impossible. I can't imagine that that number of startups would flourish in a competitive environment. And I can't imagine that we'd have that many companies listing. So I'd say that that aspect of the industry certainly looks like a bubble.
46:10Alice Han:But then we go back to Unitary itself. And its listing on the Shanghai Star market gave it a 50 billion US dollar valuation after a 600 % surge in its stock price. So you can see there's a lot of demand for this. This has really caught the imagination of the Chinese investing public.
46:35James Kynge:Yeah, I think the big question as to whether or not it becomes a bubble is what you're just alluding to, James, is will Chinese robotics companies be able to find a market outside of China? Because if you look at any form of bubble in the industry, whether it's the real estate sector or, you know, wind turbines, solar panels, EVs, batteries, you know, a huge influence on whether or not it becomes an unsustainable bubble is the extent to which China can re-export or export to the rest of the world. And it remains to be seen. It could be, and this is not a solid prediction, but it could be that robots become a geopolitical bone to pick.
47:22James Kynge:It becomes more problematic than EVs, for instance, or phones, given the sort of closer human interaction or humanoid aspect of it. But we'll see. And also maybe consumers will be a little bit more freaked out about it, but it remains to be seen. And we'll certainly be interested to see where Europe lands on this. What is the feeling in Europe now towards the humanoid robot masses coming from China?
47:49Alice Han:Well, I mean, I don't think they've really started. I've rarely seen a humanoid robot in Europe. I think I've seen one. So I don't think it's begun yet. But, you know, Europe has been a lot more open to Chinese technology than the US has. Look at the policies towards EVs and the way that EVs are flooding into countries all over Europe and into the UK as well. So my sense of it is that maybe to start with, Europe will be relatively open to the humanoids, But then all kinds of questions about data security inevitably crop up and about the impact of cyber espionage. You know, are these humanoids going to be talking to your Wi-Fi?
48:45Alice Han:Are they going to be hacking into your computer? Do they have back doors? Are there sensory modules? All of these questions that seem to dog every type of technology that comes from China. I wouldn't be surprised if they get raised as well with regard to humanoids. But that's just a while in the future, I would say.
49:06James Kynge:All right, James, you know what time it is. It is prediction time. As you look into the future, what's your prediction for this week?
49:12Alice Han:OK, I'm going back to exports. We've just been talking about exports of various Chinese goods, including humanoid robots. And my sense is that this year is going to be another bumper year for Chinese exports in total. I would say that this year, for the full year, Chinese exports could total about 4.4 trillion US dollars. That would be up about 18 % from last year. And I also think that the Chinese trade surplus is likely to exceed, but not by a huge margin, but nevertheless exceed last year's record of 1.2 trillion US dollars. That's obviously a very politically sensitive number between China and its trade partners, whether that trade partner would be the United States or the European Union and other countries around the world.
50:11Alice Han:So I'm focusing in on that. As you mentioned, Alice, exports are a vitally important part of the Chinese economy now. China really needs these exports because the rest of its economy or significant parts of its economy are not performing well at the moment. So they need the boost that they can get from exports.
50:31James Kynge:Yeah, very interesting. So my prediction, and it's on the back of a Xi-Trump meeting that is expected to happen in the U.S. on September 24, is that we'll probably see an extension of the tariff truce that is set to end in November. and that even though we have in recent days the threat of secondary sanctions on China, the threat of now overcapacity tariffs on China, that in general, I think Trump will continue to play nice with the Chinese because if you look at his foreign policy record elsewhere, he's going to need a diplomatic victory. And I think he's going to look to Xi and good relations with China in order to offset some of the negatives on the foreign policy record.
51:20James Kynge:he's also got the midterms that are coming up. So in general, I think the meeting will go ahead, even though in recent days there's been speculation that more pressure will be applied on China. And I do think that Trump will probably continue to be soft on the trade issue and maybe even on aspects of export controls. All right, that's all for this episode. Thank you for listening to China Decode. This is a production of Prof G Media. Make sure to follow us wherever you get your podcasts so you don't miss an episode. And we'll talk to you again next week.
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52:49Alice Han:This episode is brought to you by ChatGPT. Hey, it's Bill Simmons from the Bill Simmons Podcast. Have you guys heard about ChatGPT work? It's the new way to use ChatGPT for bigger multi-step projects. And when you need more than just answers, give ChatGPT work access to your apps and files, and it can create real work documents like spreadsheets, slides, and structured reports. Get started at ChatGPT.com by selecting work mode available on Plus and Pro plans. Hello. Look what TJ Maxx dragged in.
53:23James Kynge:The Devil Wears Prada 2 is now streaming on Disney Plus and Hulu. We are digital. We are downloadable. We are streamable. The fashion event of the year is certified fresh. Pull yourself together. We have work to do. Critics say it's smart and witty and the perfect sequel. That's all.
53:41Alice Han:Get runway ready for The Devil Wears Prada 2 on Disney Plus and Hulu. Rated PG-13. Thank you.
From the publisher
Alice Han and James Kynge start in Taipei, where the government has approved a record $35 billion defense budget for 2027 — an 18.2% jump — coming right on the heels of this year's Han Kuang drills, which mobilized nearly 22,000 reservists and adopted U.S.-style command tactics for the first time. They dig into what it means for Taiwan's military readiness, and whether this is more about deterring China or convincing Washington.
Then: Evergrande founder Hui Ka Yan — once China's richest man — has been sentenced to life in prison for financial fraud on a staggering scale, closing the book on the world's largest corporate liquidation tied to the property sector. Alice and James ask whether the sentencing does anything to fix China's still-struggling housing market.
Finally: China's humanoid robot industry is booming — Chinese vendors account for 97% of global shipments — but who's actually buying them, and how much of the demand is real versus a "circular financing" loop that inflates the numbers?
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